Guidance – can a sole director run a company?

The 2022 High Court case of Hashmi v Lorimer-Wing has cast into doubt whether a director of a private limited company can pass board resolutions while being the only director of the company. The general legal consensus is that following this case, for companies with unamended private company model articles, two or more directors may be required to constitute a quorum in order to hold a board meeting and that the model articles without amendment may no longer be suitable for private companies with a sole director.

This guidance note considers the case, the decision, its impact on the model articles and quorum requirements. It helps customers to understand the significance of the case as well as discussing the potential solutions that sole director companies may wish to consider putting in place going forward. The guidance also considers the subsequent different decision reached by the High Court in Re Active Wear Limited (in administration) and how these two cases interplay with one another.

This guidance note should be read in conjunction with our revised model articles for sole director companies as well as the suite of templates that accompany these revised articles.

It is recommended to seek independent legal advice before making any changes to a company's constitution.

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